Supply and demand: that's how the market works, more or less, when regulation doesn't come into play.

But what happens when it does?

San Francisco is seeing an unprecedented level of interest from high-tech companies and their employees, and the small city (population: 813,000) finds its housing inventory bulging at the seams. With an average rent of $2,000, the city is pricing out many of the people -- students, entry-level job holders, service-class folks -- the tech firms need to survive.

Typically, there are three ways to deal with this kind of gentrification:

Add more units, often vertically;

Add more units by subdividing existing inventory;

Let people live in surrounding areas (such as Oakland).

All of these things happen naturally, of course, as market pressures rise. But the city is looking at solution No. 2 above and considering an option previously left off the negotiation table: changing the building code.

San Francisco's existing code stipulates that there must be at minimum 290 square feet in a unit; proposals seek to reduce that figure to 150 square feet. Whether you call them "shoebox" units or "micro-apartments" or simply "tiny," it's clear that there is demand -- from tenants and landlords alike -- for cheaper inventory within city limits.

New Yorkers, Londoners and Tokyoites reading this article will surely scoff at San Franciscans' attitude toward personal space; all three have average unit prices that are even higher than the above.

But the initiative -- also under consideration in Boston and yes, New York -- threatens previous standards on how much personal space is acceptable. Those laws were put in place to reduce overcrowding and stress on surrounding infrastructure, something that Singapore was forced to address when shoebox units took off there.

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